Union Bank to seek Rs 1,000-cr capital support

Union Bank of India will seek Rs 950-1,000 crore worth capital support from the Union Government to fund its growth needs this year.

The bank aims to achieve 18-20 per cent growth in business in 2012-13, said D. Sarkar, Chairman and Managing Director, Union Bank.

“We had sought Rs 650 crore from the government last year, but we did not get it. This year we plan to ask for Rs 950-1,000 crore to meet our growth target,” he told newspersons on the sidelines of a banking conclave organised by the Federation of Indian Chambers of Commerce and Industry here on Thursday.

Asset-Liability management

Asset-liability management is one of the biggest challenges for banks at present, Sarkar said.

Earlier, banks could mobilise deposits for a longer tenure — nearly 5-7 years — but now the average tenure of deposits have come down to less than two years.

“It becomes a challenging task for banks to lend to sectors like infrastructure — which typically requires long term funding — as it leads to asset-liability mismatch,” he said.

According to Sarkar, resource mobilisation is also turning into an uphill task for banks. “Savings growth has become limited as people are moving towards non-financial assets. Over last three years, the rate of growth in deposits has been lower than that in credit, thereby creating a mismatch in asset-liability,” he said.

Overseas plans

Union Bank is hopeful of setting up its offshore banking unit in Dubai and its wholly owned subsidiary — UBI UK Ltd — in London by the end of this fiscal. The bank also plans to upgrade its representative offices in China and Sydney into full fledged branches, Sarkar said.

shobha.roy@thehindu.co.in